According to its fiscal year 2003 financial statements, the Federal Government currently
owns hundreds of billions of dollars in real property assets. In addition, the government
also owns or manages one in every four acres of land in the United States. While much of
the Federally-owned real and personal property assets are used to support agency missions,
it is not clear how many of these properties are actually being used in an efficient manner.
For instance, much of the government's real property no longer serves the needs for which
it was originally intended. As a result, there is a great deal of underused and unneeded
real property within the Federal Government.

The Problem

Lack of accountability within the Federal Government. There currently exists no systematic
or standard agency practice for managing Federal real property. Most landholding agencies
do not assign a permanent position with the sole responsibility and authority for determining
which of its properties are being effectively used, maintained, or disposed. Additionally,
most agencies do not develop or implement a plan within the entire agency for improving the
management of its real property assets. On a government-wide scale, there also exists no
particular group tasked with facilitating agency efforts to more effectively manage their
properties or improve accountability within the agencies. As a result, seldom are responsible
individuals in place for implementing a coherent plan to manage federal properties at agencies.

Lack of useful property information within Federal agencies. Government-wide information
regarding the type and value of Federal assets is not readily available. While agencies do
report some of their excess real property, most agencies do not maintain complete or accurate
inventory information on the use and condition of Federal properties. As a result, there
exists a lack of useful data regarding the underused and unneeded Federal real property. To
rectify this problem, it is important for agencies to employ property inventory and management
information systems with regard to the location, size, and other relevant characteristics of
real property assets. Active and efficient stewardship of government assets should be an
objective for every landholding agency to appropriately maintain those properties that are
truly needed. Similarly, it is also important for agencies to accurately determine and
classify those properties that are unneeded, and to take subsequent action toward disposing
of such properties.

Abundance of underused or unneeded Federal property. While the exact number is unknown due
to the lack of a complete inventory, Federal agencies currently hold significant amounts of
underused and unneeded real property. Some landholding agencies have reported examples of
properties that are either obsolete or in serious need of repair, although only a minimal
amount of these reported assets are sold each year. Increased attention and focus is necessary
to determine the amount of unneeded federal properties at all landholding agencies, and to take
action toward disposing of those properties.

Excessive cost to Federal Government. Maintaining underused or unneeded Federal properties is
costly to the government. Many of these properties, while not actually used, still have
expensive day-to-day operational costs, such as regular maintenance, utilities fees, and security
expenses. Each agency that maintains underused or unneeded property unnecessarily incurs an
opportunity cost by failing to sell or exchange the property for a more appropriate one. For
example, the L. Mendel Rivers Federal Building in Charleston, South Carolina, has languished for
years as a vacant, asbestos-contaminated, 100,000 square foot facility. Although the building has
strong potential for private sector demand, current Federal laws and regulations have made it
difficult to sell or lease the property. While this facility is finally beginning to receive some
attention, for years maintenance costs have been incurred while no revenues have been generated.

Lack of necessary tools and incentives for agency disposal of underused properties. The current
Federal property disposal system does not provide agencies with the necessary tools for dealing
with underused and unneeded property. The laws governing the disposal of Federal property date
back to 1949, and they do not provide authority for agencies to outlease unused land or to sell
or exchange obsolete facilities for more suitable ones. Additionally, the current disposal system
does not provide motivation to deploy ineffective assets into more productive ones, as any proceeds
from sales are deposited into the U.S. Treasury rather than the landholding agency.

The Initiative

Establish a Senior Real Property Officer at Federal agencies. Established by an Executive Order,
a Senior Real Property Officer will be designated among the senior management officials within
each agency. This Senior Real Property Officer will serve as the senior manager tasked with
developing and implementing an agency asset management plan. Specifically, the Officer will:
identify and categorize any real property owned, leased, or otherwise managed by the agency;
prioritize actions to be taken to improve the operational and financial management of inventory;
make life-cycle cost estimations associated with the prioritized actions; identify legislative
authorities that are required to address the priorities; identify and pursue goals and targets
with appropriate time frames and deadlines; provide advice on adequate budget amounts for
activities; and focus on those activities and efforts allowed under current law.

Establish a Federal Real Property Council. Established by an Executive Order, a Federal Real
Property Council will serve as a working group to facilitate the success of the agency's asset
management plans. The Council will be composed of all agency Senior Real Property Officers,
the Controller of the Office of Management and Budget, and the Administrator of General Services.
The Deputy Director for Management of the Office of Management and Budget will be a member and
serve as the chair of the Council. The Council will establish appropriate performance measurements
for evaluating the costs and benefits involved with acquiring, repairing, maintaining, operating,
managing, and disposing of Federal real properties at particular agencies. The Council will also
serve as a clearinghouse for best practices in evaluating actual progress in the implementation
of real property enhancements.

Reform the authorities for managing Federal real property. The Administration supports
legislative efforts to reform the asset management and property disposal process. Specifically,
the Administration supports "Freedom to Manage" legislation that would provide agencies with
the authority to: outlease or sublease underutilized properties; sell or exchange unneeded
property and use the proceeds for replacement services; enter into public-private partnerships
to construct or renovate need facilities under certain circumstances; and retain the sale proceeds
of surplus properties. Agencies should be provided with the appropriate asset management tools
and financial incentives to manage their real property more effectively. The Administration will
continue to engage Congress in an effort to enact modern and common-sense property management
capabilities.

The Expected Near-Term Results

Without Comprehensive Government-wide Legislation

Without the benefit of comprehensive government-wide Federal legislation, the Administration
expects that an
Executive Order
will lead to an increased level of agency accountability and the development and implementation
of agency asset management plans.

Accountability. The Administration expects that these initiatives will lead to an increased
level of accountability for real property management within the agencies. For the first time,
each landholding agency will have a senior property officer devoted to achieving a complete
inventory of its real properties; and with specific real property information, meaningful goals
and objectives can be developed and progress against those goals can be measured. Additionally,
the agencies will have the benefit of a Federal Real Property Council to assist them in their
efforts to improve the management of real property.

Asset management plans. The Administration expects that the efforts by the Senior Real Property
Officers and the Federal Real Property Council will lead to the development and implementation of
agency asset management plans. Such plans will help to foster an environment within Federal
agencies that will promote better asset management and the disposal of unneeded Federal properties.

Demonstration authority. In the absence of broad, government-wide federal legislation, the
Administration will identify those landholding agencies and/or specific real properties in which
it believes asset management flexibilities would be particularly useful. The Administration will
then seek demonstration authority through the appropriations process, in order to apply these
asset management flexibilities on a limited or temporary basis.

With Comprehensive Government-wide Legislation

With the benefit of comprehensive government-wide Federal legislation, the Administration expects
that additional near-term results would be attained, including an improved standard real property
disposal process.

Improved standard disposal process. The Administration expects the legislative efforts will create
an improved process for disposing of real properties. By providing the necessary tools and incentives,
agencies will be in a better position to manage their properties through an increasing opportunity for
outlease or sublease agreements, public-private partnerships, and replacement or sales transactions.

The Expected Long-Term Results

Without Comprehensive Government-wide Legislation

The Administration expects that these initiatives will lead to a regular and well-organized inventory
of Federal asset management practices within all landholding agencies. In the long-term, agencies will
possess real-time property data that can be used to determine what Federal properties should be
maintained, require cost-effective repairs, or qualify for disposal; this information can then be
used to strengthen the argument for the creation of new real estate management authorities.

With Comprehensive Government-wide Legislation

With the benefit of comprehensive, government-wide Federal legislation, in the long-term, the
Administration expects there to be an improved, incentive-driven process for agencies to exchange
or dispose of their properties. Agencies would then have the necessary tools and incentives for
more proficient management of their federal properties. The Administration expects that, in the
years following the passage of comprehensive legislation, these initiatives can ultimately lead to
the effective and efficient stewardship of Federal real property assets.